The proposed outright acquisition of Yahoo! by Microsoft would likely be a colossal mistake. It could kill off a major viable internet player by destroying its culture while reducing the overall competitive balance that has developed over the past half dozen year.
Yahoo needs to remain, at the very least, a seperate entity. It’s online brand is stronger than that of Microsoft. And if Microsoft grabs it outright and absorbs Yahoo! completely, it would put Yahoo users at a loss.
Consider the following recent stats:
Yahoo! Properties: 13.2%
MSN Properties: 2.4%
Yahoo! Mail: 54.63%
Windows Live Mail: 25.54%
Yahoo! News: 7.38%
Yahoo! Weather: 2.08%
Yahoo! Finance: 29.15%
MSN Money: 10.14%
Yahoo! clearly has a stronger online brand. MSN, while not horrible, is a distant second (or third if you add Google) on most indicators.
And a full fledged purchase of Yahoo! means that the company would have to battle other parts of Microsoft for resources and attention as Redmond will be battling Google, IBM, Oracle, and Apple.